While the hard-pressed shipping industry is recovering from recent declines, it is still being hindered by fragile global economic conditions as well as depressed freight rates and an oversupply of vessels, says a new United Nations report.

The “http://www.unctad.org/en/docs/rmt2010_en.pdfReview of Maritime Transport 2010, produced by the UN Conference on Trade and Development (UNCTAD), shows that international seaborne trade contracted by 4.5 per cent in 2009 to 7.94 billion tons, which is below 2007 levels. It had climbed to an all-time high in 2008.

Although a global recovery is currently under way, it is uneven, slower than the recoveries that have followed previous recessions, and subject to numerous uncertainties and to the fragile global economic conditions, according to the report, an annual publication that provides important information on this vital sector.

Maritime transport is the single most important transport mode, with around 80 per cent of the market share in the global movement of goods. In some developing countries this percentage is much higher, due to cumbersome cross-border procedures and an underdeveloped land transport infrastructure.

The report notes that seaborne trade in dry bulk commodities, such as iron ore, grain, coal, bauxite/alumina and phosphate, which represent around one quarter of seaborne trade, actually grew by an estimated 1.4 per cent in 2009. However, this figure masks fluctuations by commodity type, it adds.The supply of new vessels, the report points out, showed no signs of abating. At the beginning of 2010, the world merchant fleet reached 1,276 million deadweight tons (dwt), an increase of 84 million dwt over 2009. Despite this increase, the combined effect of a downturn in demand and an oversupply of vessels meant that freight rates for many vessel types remained depressed.

The report also details recent developments in maritime legislation, such as steps by the UN International Maritime Organization (IMO) regarding the scope and content of an international regime to control emissions of greenhouse gases from international shipping.

Every year the report has a regional focus and this year it is on Asia since 2007, when UNCTAD last reported on the region. The report notes that recovery in the region, where gross domestic product (GDP) growth decelerated to 4 per cent in 2009, its lowest level in eight years remains fragile and is subject to downside risks.Dec 20 2010

· Beyond ‘dangerous’ climate change: emission scenarios for a new world

The Copenhagen Accord reiterates the international community’s commitment to ‘hold the increase in global temperature below 2 degrees Celsius’. Yet its preferred focus on global emission peak dates and longer-term reduction targets, without recourse to cumulative emission budgets, belies seriously the scale and scope of mitigation necessary to meet such a commitment. Moreover, the pivotal importance of emissions from non-Annex1 nations in shaping available space for Annex1 emission pathways received, and continues to receive, little attention. Building on previous studies, this paper uses a cumulative emissions framing, broken down to Annex1 and non-Annex1 nations, to understand the implications of rapid emission growth in nations such as China and India, for mitigation rates elsewhere. The analysis suggests that despite high-level statements to the contrary, there is now little to no chance of maintaining the global mean surface temperature at or below 2°C. Moreover, the impacts associated with 2°C have been revised upwards, sufficiently so that 2°C now more appropriately represents the threshold between ‘dangerous’ and ‘extremely dangerous’ climate change. Ultimately, the science of climate change allied with the emission scenarios for Annex1 and non-Annex1 nations suggests a radically different framing of the mitigation and adaptation challenge from that accompanying many other analyses, particularly those directly informing policy.

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A number of recent studies have found a strong link between peak human-induced global warming and cumulative carbon emissions from the start of the industrial revolution, while the link to emissions over shorter periods or in the years 2020 or 2050 is generally weaker. However, cumulative targets appear to conflict with the concept of a ‘floor’ in emissions caused by sectors such as food production. Here, we show that the introduction of emissions floors does not reduce the importance of cumulative emissions, but may make some warming targets unachievable. For pathways that give a most likely warming up to about 4°C, cumulative emissions from pre-industrial times to year 2200 correlate strongly with most likely resultant peak warming regardless of the shape of emissions floors used, providing a more natural long-term policy horizon than 2050 or 2100. The maximum rate of CO2-induced warming, which will affect the feasibility and cost of adapting to climate change, is not determined by cumulative emissions but is tightly aligned with peak rates of emissions. Hence, cumulative carbon emissions to 2200 and peak emission rates could provide a clear and simple framework for CO2 mitigation policy.

The Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4) assessed a range of scenarios of future greenhouse-gas emissions without policies to specifically reduce emissions, and concluded that these would lead to an increase in global mean temperatures of between 1.6°C and 6.9°C by the end of the twenty-first century, relative to pre-industrial. While much political attention is focused on the potential for global warming of 2°C relative to pre-industrial, the AR4 projections clearly suggest that much greater levels of warming are possible by the end of the twenty-first century in the absence of mitigation. The centre of the range of AR4-projected global warming was approximately 4°C. The higher end of the projected warming was associated with the higher emissions scenarios and models, which included stronger carbon-cycle feedbacks. The highest emissions scenario considered in the AR4 (scenario A1FI) was not examined with complex general circulation models (GCMs) in the AR4, and similarly the uncertainties in climate–carbon-cycle feedbacks were not included in the main set of GCMs. Consequently, the projections of warming for A1FI and/or with different strengths of carbon-cycle feedbacks are often not included in a wider discussion of the AR4 conclusions. While it is still too early to say whether any particular scenario is being tracked by current emissions, A1FI is considered to be as plausible as other non-mitigation scenarios and cannot be ruled out. (A1FI is a part of the A1 family of scenarios, with ‘FI’ standing for ‘fossil intensive’. This is sometimes erroneously written as A1F1, with number 1 instead of letter I.) This paper presents simulations of climate change with an ensemble of GCMs driven by the A1FI scenario, and also assesses the implications of carbon-cycle feedbacks for the climate-change projections. Using these GCM projections along with simple climate-model projections, including uncertainties in carbon-cycle feedbacks, and also comparing against other model projections from the IPCC, our best estimate is that the A1FI emissions scenario would lead to a warming of 4°C relative to pre-industrial during the 2070s. If carbon-cycle feedbacks are stronger, which appears less likely but still credible, then 4°C warming could be reached by the early 2060s in projections that are consistent with the IPCC’s ‘likely range’.

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Climate models vary widely in their projections of both global mean temperature rise and regional climate changes, but are there any systematic differences in regional changes associated with different levels of global climate sensitivity? This paper examines model projections of climate change over the twenty-first century from the Intergovernmental Panel on Climate Change Fourth Assessment Report which used the A2 scenario from the IPCC Special Report on Emissions Scenarios, assessing whether different regional responses can be seen in models categorized as ‘high-end’ (those projecting 4°C or more by the end of the twenty-first century relative to the preindustrial). It also identifies regions where the largest climate changes are projected under high-end warming. The mean spatial patterns of change, normalized against the global rate of warming, are generally similar in high-end and ‘non-high-end’ simulations. The exception is the higher latitudes, where land areas warm relatively faster in boreal summer in high-end models, but sea ice areas show varying differences in boreal winter. Many continental interiors warm approximately twice as fast as the global average, with this being particularly accentuated in boreal summer, and the winter-time Arctic Ocean temperatures rise more than three times faster than the global average. Large temperature increases and precipitation decreases are projected in some of the regions that currently experience water resource pressures, including Mediterranean fringe regions, indicating enhanced pressure on water resources in these areas.

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While the parties to the UNFCCC agreed in the December 2009 Copenhagen Accord that a 2°C global warming over pre-industrial levels should be avoided, current commitments on greenhouse gas emissions reductions from these same parties will lead to a 50:50 chance of warming greater than 3.5°C. Here, we evaluate the differences in impacts and adaptation issues for water resources in worlds corresponding to the policy objective (+2°C) and possible reality (+4°C). We simulate the differences in impacts on surface run-off and water resource availability using a global hydrological model driven by ensembles of climate models with global temperature increases of 2°C and 4°C. We combine these with UN-based population growth scenarios to explore the relative importance of population change and climate change for water availability. We find that the projected changes in global surface run-off from the ensemble show an increase in spatial coherence and magnitude for a +4°C world compared with a +2°C one. In a +2°C world, population growth in most large river basins tends to override climate change as a driver of water stress, while in a +4°C world, climate change becomes more dominant, even compensating for population effects where climate change increases run-off. However, in some basins where climate change has positive effects, the seasonality of surface run-off becomes increasingly amplified in a +4°C climate.

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Agricultural development in sub-Saharan Africa faces daunting challenges, which climate change and increasing climate variability will compound in vulnerable areas. The impacts of a changing climate on agricultural production in a world that warms by 4°C or more are likely to be severe in places. The livelihoods of many croppers and livestock keepers in Africa are associated with diversity of options. The changes in crop and livestock production that are likely to result in a 4°C+ world will diminish the options available to most smallholders. In such a world, current crop and livestock varieties and agricultural practices will often be inadequate, and food security will be more difficult to achieve because of commodity price increases and local production shortfalls. While adaptation strategies exist, considerable institutional and policy support will be needed to implement them successfully on the scale required. Even in the 2°C+ world that appears inevitable, planning for and implementing successful adaptation strategies are critical if agricultural growth in the region is to occur, food security be achieved and household livelihoods be enhanced. As part of this effort, better understanding of the critical thresholds in global and African food systems requires urgent research.

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Changes in the potential distribution of humid tropical forests on a warmer planet

The future of tropical forests has become one of the iconic issues in climate-change science. A number of studies that have explored this subject have tended to focus on the output from one or a few climate models, which work at low spatial resolution, whereas society and conservation-relevant assessment of potential impacts requires a finer scale. This study focuses on the role of climate on the current and future distribution of humid tropical forests (HTFs). We first characterize their contemporary climatological niche using annual rainfall and maximum climatological water stress, which also adequately describe the current distribution of other biomes within the tropics. As a first-order approximation of the potential extent of HTFs in future climate regimes defined by global warming of 2°C and 4°C, we investigate changes in the niche through a combination of climate-change anomaly patterns and higher resolution (5km) maps of current climatology. The climate anomalies are derived using data from 17 coupled Atmosphere–Ocean General Circulation Models (AOGCMs) used in the Fourth Assessment of the Intergovernmental Panel for Climate Change. Our results confirm some risk of forest retreat, especially in eastern Amazonia, Central America and parts of Africa, but also indicate a potential for expansion in other regions, for example around the Congo Basin. The finer spatial scale enabled the depiction of potential resilient and vulnerable zones with practically useful detail. We further refine these estimates by considering the impact of new environmental regimes on plant water demand using the UK Met Office land-surface scheme (of the HadCM3 AOGCM). The CO2-related reduction in plant water demand lowers the risk of die-back and can lead to possible niche expansion in many regions. The analysis presented here focuses primarily on hydrological determinants of HTF extent. We conclude by discussing the role of other factors, notably the physiological effects of higher temperature.

Sea-level rise and its possible impacts given a ‘beyond 4°C world’ in the twenty-first century

The range of future climate-induced sea-level rise remains highly uncertain with continued concern that large increases in the twenty-first century cannot be ruled out. The biggest source of uncertainty is the response of the large ice sheets of Greenland and west Antarctica. Based on our analysis, a pragmatic estimate of sea-level rise by 2100, for a temperature rise of 4°C or more over the same time frame, is between 0.5m and 2m—the probability of rises at the high end is judged to be very low, but of unquantifiable probability. However, if realized, an indicative analysis shows that the impact potential is severe, with the real risk of the forced displacement of up to 187 million people over the century (up to 2.4% of global population). This is potentially avoidable by widespread upgrade of protection, albeit rather costly with up to 0.02 per cent of global domestic product needed, and much higher in certain nations. The likelihood of protection being successfully implemented varies between regions, and is lowest in small islands, Africa and parts of Asia, and hence these regions are the most likely to see coastal abandonment. To respond to these challenges, a multi-track approach is required, which would also be appropriate if a temperature rise of less than 4°C was expected. Firstly, we should monitor sea level to detect any significant accelerations in the rate of rise in a timely manner. Secondly, we need to improve our understanding of the climate-induced processes that could contribute to rapid sea-level rise, especially the role of the two major ice sheets, to produce better models that quantify the likely future rise more precisely. Finally, responses need to be carefully considered via a combination of climate mitigation to reduce the rise and adaptation for the residual rise in sea level. In particular, long-term strategic adaptation plans for the full range of possible sea-level rise (and other change) need to be widely developed.

Massive population displacements are now regularly presented as one of the most dramatic possible consequences of climate change. Current forecasts and projections show that regions that would be affected by such population movements are low-lying islands, coastal and deltaic regions, as well as sub-Saharan Africa. Such estimates, however, are usually based on a 2°C temperature rise. In the event of a 4°C+ warming, not only is it likely that climate-induced population movements will be more considerable, but also their patterns could be significantly different, as people might react differently to temperature changes that would represent a threat to their very survival. This paper puts forward the hypothesis that a greater temperature change would affect not only the magnitude of the associated population movements, but also—and above all—the characteristics of these movements, and therefore the policy responses that can address them. The paper outlines the policy evolutions that climate-induced displacements in a 4°C+ world would require.

With weakening prospects of prompt mitigation, it is increasingly likely that the world will experience 4°C and more of global warming. In such a world, adaptation decisions that have long lead times or that have implications playing out over many decades become more uncertain and complex. Adapting to global warming of 4°C cannot be seen as a mere extrapolation of adaptation to 2°C; it will be a more substantial, continuous and transformative process. However, a variety of psychological, social and institutional barriers to adaptation are exacerbated by uncertainty and long timeframes, with the danger of immobilizing decision-makers. In this paper, we show how complexity and uncertainty can be reduced by a systematic approach to categorizing the interactions between decision lifetime, the type of uncertainty in the relevant drivers of change and the nature of adaptation response options. We synthesize a number of issues previously raised in the literature to link the categories of interactions to a variety of risk-management strategies and tactics. Such application could help to break down some barriers to adaptation and both simplify and better target adaptation decision-making. The approach needs to be tested and adopted rapidly.

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The role of interactions in a world implementing adaptation and mitigation solutions to climate change

The papers in this volume discuss projections of climate change impacts upon humans and ecosystems under a global mean temperature rise of 4°C above preindustrial levels. Like most studies, they are mainly single-sector or single-region-based assessments. Even the multi-sector or multi-region approaches generally consider impacts in sectors and regions independently, ignoring interactions. Extreme weather and adaptation processes are often poorly represented and losses of ecosystem services induced by climate change or human adaptation are generally omitted. This paper addresses this gap by reviewing some potential interactions in a 4°C world, and also makes a comparison with a 2°C world. In a 4°C world, major shifts in agricultural land use and increased drought are projected, and an increased human population might increasingly be concentrated in areas remaining wet enough for economic prosperity. Ecosystem services that enable prosperity would be declining, with carbon cycle feedbacks and fire causing forest losses. There is an urgent need for integrated assessments considering the synergy of impacts and limits to adaptation in multiple sectors and regions in a 4°C world. By contrast, a 2°C world is projected to experience about one-half of the climate change impacts, with concomitantly smaller challenges for adaptation. Ecosystem services, including the carbon sink provided by the Earth’s forests, would be expected to be largely preserved, with much less potential for interaction processes to increase challenges to adaptation. However, demands for land and water for biofuel cropping could reduce the availability of these resources for agricultural and natural systems. Hence, a whole system approach to mitigation and adaptation, considering interactions, potential human and species migration, allocation of land and water resources and ecosystem services, will be important in either a 2°C or a4°C world.

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When a country faces the global effects of an economic crisis and there is a risk that it could have trouble accessing funds in the capital markets, it often needs short-term funding to weather the crisis and reassure financial markets and investors. Even before the recent global economic crisis emerged, the IMF was in the process of reforming how it lends money to countries that find themselves in a cash crunch. The idea was to create different kinds of loans for the very different needs of our 187 member countries. The Flexible Credit Line (FCL) was designed to meet the increased demand for crisis-prevention and crisis-mitigation lending from countries with robust policy frameworks and very strong track records in economic performance. To date, three countries, Poland, Mexico and Colombia, have accessed the FCL: due in part to the favorable market reaction, all three countries have so far not drawn FCL resources.

Flexibility to meet countries’ needs

A keyobjective of the lending reform is to reduce the perceived stigma of borrowing from the IMF, and to encourage countries to ask for assistance before they face a full blown crisis; in addition, countries with very strong track records can apply for the FCL when faced with actual balance of payments pressures. The flexibility provided by the FCL also means the IMF can meet a broad range of country needs:

Countries haveflexibilityto draw at any time within a pre-specified window on the credit line, or to treat it as a precautionary instrument.

Assuring qualified countries they have large and up-front access to IMF resources with no ongoing conditions.

The FCL works as a renewable credit line, which at the country’s discretion could initially be for either one- or two-years with a review of eligibility after the first year. If a country decided to draw on the credit line, repayment should take place over a 3¼ to 5year period.There is no cap on access to IMF resources, and the need for resources will be assessed on a case-by-case basis.

Low cost to get through tough times

The cost of borrowing under the FCL is the same as that under the Fund’s traditional Stand-By Arrangement (SBA). If accessing Fund resources on a precautionary basis, countries pay a commitment fee that is refunded if they opt to draw on those resources. The commitment fee increases with the level of access available over a twelve month period, effectively ranging between 24and 27basis points for access between 500 and 1000percent of quota, and higher above 1000percent of quota.

As with other non-concessional IMF facilities, the cost of drawing under the FCL varies with the scale and duration of lending. The lending rate is tied to the IMF’s market-related interest rate, known as the basic rate of charge, which is itself linked to the Special Drawing Rights (SDR) interest rate. Large loans, with credit outstanding above 300percent of quota, carry a surcharge of 200basis points. If credit outstanding remains above 300percent of quota after three years, the surcharge rises to 300basis points. The escalation of the surcharge is designed to discourage large and prolonged use of IMF resources. Currently, the effective interest rate under the FCL (or an SBA) for access between 500 and 1000percent of quota—ranges between 2.1–2.7percent, rising to about 2.5–3.4percent after 3years, and higher above 1000percent of quota.1 These interest rates exclude a flat 50bps service charge, which is applied to all Fund disbursements.

Very strong performers qualify

The qualification criteria are the core of the FCL and serve to show the IMF’s confidence in the qualifying member country’s policies and ability to take corrective measures when needed. At the heart of the qualification process is an assessment that the member country:

The Executive Board of the International Monetary Fund (IMF) today approved a successor one-year arrangement for Mexico under the Flexible Credit Line (FCL) in an amount equivalent to SDR 31.528 billion (about US$48 billion).The Mexican authorities stated they intend to treat the arrangement as precautionary and do not intend to draw on the line.

The FCL was established on March 24, 2009 as part of a major reform of the Fund’s lending framework (see Press Release No. 09/85). The FCL is designed for crisis prevention purposes as it provides the flexibility to draw on the credit line at any time. Disbursements are not phased nor conditioned on compliance with policy targets as in traditional IMF-supported programs. This flexible access is justified by the very strong track records of countries that qualify for the FCL, which gives confidence that their economic policies will remain strong.

Following the Executive Board discussion of Mexico, Mr. John Lipsky, First Deputy Managing Director and Acting Chairman of the Board, made the following statement:

“Mexico has a sustained record of sound economic policies, and has very strong economic fundamentals and frameworks. Public and private debt levels were reduced and balance sheets strengthened in the years before the global crisis. Well implemented rules-based policy mechanisms, including the balanced budget fiscal rule and inflation targeting framework and flexible exchange rate regime, have anchored stability.

This strong policy framework has helped preserve stability during the crisis, and––for the first time in many decades––allowed the authorities to deliver a sizable countercyclical fiscal and monetary policy response. Adroit steps have been taken in various financial market segments to maintain orderly conditions. The authorities have continued to demonstrate their commitment and ability to reform in challenging times, including through the passage of important revenue measures in the 2010 budget that will strengthen the medium-term fiscal outlook. Swift action to secure contingent credit lines during the crisis—from the U.S. Federal Reserve and the International Monetary Fund—also helped maintain external confidence.

On the back of these strong policy measures and improving global economic conditions, growth has resumed since mid-2009, asset prices have recovered from troughs seen at the height of the crisis, and domestic financial stability has been maintained. Looking forward, policies will continue to be underpinned by the rules-based macroeconomic framework, and the authorities intend to continue to react as needed to any future shocks that may arise.

Nonetheless, sizeable downside risks still confront the global economy. It is against this background that, at the authorities’ request, the Executive Board today approved a one-year arrangement under the IMF’s FCL, which the authorities intend to treat as precautionary. This successor FCL arrangement will continue to play an important role in supporting the authorities’ overall macroeconomic strategy and in bolstering confidence until external conditions improve, complementing financing from other multilaterals.

Mexico’s very strong policy frameworks and economic fundamentals, together with the additional insurance provided by the successor arrangement under the FCL, put Mexico in a very strong position to deal with other potential risks that could arise in the period ahead as the global economy continues to gradually recover from the crisis.”